Politics, as the German statesman Otto von Bismarck once
said, is the art of the possible. Shinzo Abe would no doubt
agree. He has been redefining the limits of political
possibility since taking power in Japan in December.

Abe comes from a long line of political leaders. His
grandfather Nobusuke Kishi served as prime minister in the late
1950s, and his father, Shintaro Abe, was a leading figure in
the Liberal Democratic Party who held a number of ministerial
posts, including head of International Trade and Industry and
Foreign Affairs, in the 1980s.

Shinzo Abe has not only continued in that tradition, he has
revitalized politics in Japan. Since leading the LDP to victory
in the December elections and returning to the prime
ministers office he held briefly in 200607,
Abe has jolted Japan out of its long political torpor and
showed that policy does matter. He began to set change in
motion one month before the election, when he made a bold
promise to reflate the economy and push the Bank of Japan to
ease monetary policy. Stock prices immediately took off on a
massive rally, and the yen entered a major decline.

In office Abe has continued to deliver. The government
adopted a ¥10.3 trillion ($101 billion) fiscal
stimulus plan earlier this year to revive growth. The prime
minister appointed a radical new governor at the Bank of Japan,
Haruhiko Kuroda, who hit the ground running by pushing through
a quantitative easing program bigger than the Federal Reserve
Boards at his first meeting, in April, and doubling the
central banks inflation target, to 2 percent. The
governments policies have generated a new climate of
optimism about Japan. The economy accelerated in the first
quarter of 2013, with growth running at an annual rate of 3.5
percent, up from 1.0 percent in the previous quarter. Foreign
investors have piled into the Tokyo Stock Exchange, hoping to
benefit from a major rerating of Japanese stocks.
Notwithstanding a sharp, 1,143-point sell-off on May 23, the
Nikkei 225 index of leading stocks had by that point gained
67.2 percent since the rally began in November.

That optimism is beginning to infect Japans corporate
leaders  a crucial factor considering that the new
policies must spur corporate investment and expansion if they
are to succeed in fostering a sustainable economic
turnaround.

Abenomics has put Japan back at the center of
the world, says Carlos Ghosn, chief executive officer
of Nissan Motor Co., the countrys second-largest
automaker. We hope this focus on the economy and on the
revival of Japan will continue.

Responding by e-mail to questions from Institutional
Investor, Ghosn explains that Nissan had been urging the
government to remove the headwind of exchange rates
since 2008. Five years later it is happening. So we applaud
and we recognize the fact that something has been done.
The new easy-money policies and the governments
apparent support for a weaker yen have caused the currency to
drop by 16.7 percent since mid-November, to 102.84 to the
dollar late last month.

The French auto executive (Nissan is 43 percent owned by
Renault, of which Ghosn is chairman and CEO) believes the
reflationary policies will continue to stimulate Japan Inc.
In my opinion its not finished, he writes.
Companies are starting to build up more production.
People are starting to reinvest again. The stock market is
up. Foreign companies are more interested in Japan.

Ghosns views carry great weight in Japan given his
prominence as an executive who helped rescue Nissan from
steep losses at the end of the 1990s and return it to
profitability over the past decade. Investors and analysts
welcome his leadership and performance. Ghosn is voted the
best CEO in the Autos sector by the buy-side and sell-side
analysts who chose the 2013 All-Japan Executive Team,
II s inaugural ranking of the top chief
executives, chief financial officers, investor relations
professionals and IR teams.

The company with the No. 1 management overall is Nidec
Corp., a maker of small precision motors for computer
equipment, appliances and autos. CEO Shigenobu Nagamori is
cited as the best chief executive in the
Electronics/Components sector by both buy-side and sell-side
analysts. Masuo Yoshimatsu wins similar recognition as the
sectors best CFO, and buy-side analysts rate
Nidecs Investor Relations team and its chief, Masahiro
Nagayasu, as No. 1 in the sector. Those scores make Nidec the
Most Honored Company in Japan, according to the ranking.

Auto-parts manufacturer Denso Corp. and giant lender
Mizuho Financial Group rank just behind Nidec on the Most
Honored list, followed by Nissan Motor, telecommunications
operator KDDI Corp. and drug company Astellas Pharma.

The All-Japan Executive Team is based on the votes of 387
buy-side analysts at 223 investment firms and 245 sell-side
analysts at 25 firms.

Japanese companies have struggled with deflation and a
low-growth economy for years while rivals such as China and
South Korea have expanded; the countrys consumer
electronics industry has lost market share to the likes of
Apple and Samsung Electronics Co.

Corporate Japan will consider the new government
successful if it can end the psychology of deflation and
stagnation and offer the prospect of renewed growth. So far,
business leaders are fairly optimistic.

Abe-san has already achieved a lot,
Nidecs Nagamori says in an interview at the
companys headquarters, outside Kyoto in western Japan.
In particular, he cites the reversal of the yen after years
of punishing strength that made companies increasingly
uncompetitive against South Korean rivals. I believe
now Japanese companies are coming back to a level playing
field, he says.

Going forward, much depends on the LDPs ability to
win the July elections for the upper house of Parliament,
Nagamori says. Until the elections have been held and
are seen to have resulted in an endorsement of Abes
leadership  notably on the yen but also in fiscal
policy  the prime minister basically has to keep his
head down, the CEO says.

Abe needs a solid majority in the upper house to enact
growth-enhancing structural reforms, which he calls the third
arrow in his policy quiver after fiscal and monetary
stimulus. In a speech last month, the prime minister said the
reforms would include deregulation measures aimed at boosting
private investment to ¥70 trillion a year, the level
that prevailed before the financial crisis.

Investment does appear to be picking up. According to the
Bank of Japan, new loans for fixed investment rose 7.1
percent in the first quarter of 2013, to
¥12.1 trillion.

Corporate profits are also on the rise. By May 17 some 376
companies, or 22 percent of the total traded on the Tokyo
Stock Exchange, had released their annual reports. They
showed an average profit rise of about 30 percent. Many
analysts are forecasting a further increase of about 50
percent in the current financial year, ending March 31, 2014;
this would roughly restore profits to their precrisis level.
Even that projection may understate the potential.

Jesper Koll, director of Japan equity research at J.P.
Morgan in Tokyo, predicts that corporate earnings will jump
by 58 percent this year. Japan Inc. is now in a sweet
spot where the dramatic cost cuts and restructuring that were
implemented after Fukushima and the Thai floods yield the
first concrete benefits, he says, referring to the
tsunami that caused a meltdown at Japans Fukushima
Daiichi nuclear plant in March 2011 and the floods that
disrupted production in Thailand later that year. In the
financial year just ended, Japanese companies have reported
sales gains of about 3 percent and earnings gains of about 20
percent, Koll says. By comparison, these companies have
typically needed 5 percent sales growth to generate earnings
gains of 10 percent.

Efficiency and margins have almost doubled,
Koll says. This is not about Abenomics; windfall gains
from a weaker yen are negligible so far. Thatll be a
turbocharge to earnings going forward, particularly since
giants like Toyota and Hitachi are budgeting for a
¥90-dollar rate for the current year.

Will Abenomics work? Jun Konomi, COO of Asia-Pacific
equity research at Nomura Securities, says the aggressive
fiscal and monetary policies adopted by Abe and Kuroda have
created the right framework. The macro economy is in
fine shape, and the central bank will definitely take the
measures necessary to let inflation rise to a 2 percent per
annum level, he says. The micro economy, however, will
take more time, Konomi adds. Even if the LDP secures a
victory in the upper-house elections this summer, it will
take time to put in place structural reforms considering the
likely opposition from entrenched interest groups, such as
Japans agricultural lobby.

Abe is reaching out to the business community to help push
his agenda. The prime minister tapped Takeshi
Niinami, CEO of convenience store chain Lawson, to take a
seat on the new Industrial Competitiveness Council, led by
Heizo Takenaka, a prominent reformer who helped resolve
Japans banking crisis a decade ago. The council was
created to advise the government on structural reforms. Both
buy-side and sell-side analysts voted Niinami the No. 2 CEO
in Retailing, and Lawson ties for 16th place on the list of
Japans Most Honored Companies.